[co-author: Angela George]

THC beverages, zero-proof spirits, dealcoholized wines, non-alcoholic (NA) beer, kava and kratom drinks and functional wellness beverages are filling more shelves than ever at package and liquor stores, groceries, bodegas, convenience stores and other mainstream CPG channels. These alcohol-adjacent products have grown in popularity at a moment when, according to 2025 survey data, Americans are drinking less than at any point in recorded history.

Meanwhile, non-alcoholic beverages are quickly capturing market share and consumer dollars, particularly those products that position themselves as a healthier alternative to traditional alcohol products. Many beverage alternatives tout wellness benefits like increased relaxation, improved mood, and enhanced focus, without the negative health impacts associated with beer, wine, and spirits.

What does this massive consumer shift mean for investors, executives and founders operating in the increasingly complex and overlapping functional beverage, hemp beverage and alcohol sectors? It means that stakeholders need to be well versed in how alcoholic beverages are regulated, as well as the regulatory landscape emerging around counterparts like hemp beverages, fermented drinks like kombucha, nootropic and adaptogenic beverages, and alcohol industry byproducts such as verjus.

Frequently asked questions for veterans and new entrants in the alcohol and non-alcoholic beverage sectors include:

• What are the major regulators in the alcohol industry and CPG beverage industry?
• What key regulatory concepts are applicable to all beverage categories?
• Are hemp beverages legal?
• Where can THC beverages be sold?
• Is the United States going to outlaw hemp beverages, either through the hemp ban or federal rescheduling of cannabis?
• Are non-alcoholic drinks regulated like alcohol?
• Does it matter whether a product is labeled as a non-alcoholic spirit, beer, or wine?
• Does kombucha count as an alcoholic beverage?
• How does the FDA regulate kratom, kava, and kanna drinks?
• How is verjus regulated?

Which Agencies Regulate Beverage Companies?

There are many state and federal agencies that set and enforce compliance metrics that beverage companies must follow, whether those beverages contain alcohol or not. These include:

The Food and Drug Administration (FDA)

The FDA regulates the vast majority of food and beverages sold in the United States, including non-alcoholic beverages like soft drinks, juice, bottled water and dairy products, as well as any drink containing less than 0.5% alcohol by volume (ABV). The FDA has authority over ingredient safety—including Generally Recognized as Safe (GRAS) classification or food additive approval—product labeling, allergen disclosures, manufacturing standards (including current Good Manufacturing Practices or cGMPs), as well as product recalls and health or structure/function claims.

The Alcohol and Tobacco Tax and Trade Bureau (TTB)

The TTB enforces federal laws governing the production, labeling, advertising, and taxation of alcohol and tobacco products. The TTB has jurisdiction over products containing more than 0.5% alcohol by volume, including malt beverages (beer, hard seltzers, and similar products), wines containing between 7% and 24% ABV, and distilled spirits.

The Federal Trade Commission (FTC)

The FTC does not regulate what goes into a beverage, but it does regulate how beverages are marketed. Its mandate covers deceptive advertising, unfounded health claims, and anticompetitive practices. That means that brands touting wellness benefits like improved mood, sleep or focus, pain relief, and other health outcomes must provide credible scientific evidence to substantiate those claims.

State Alcohol Control Boards

Each state has its own authority for regulating alcohol sales and distribution, commonly operating under names like the Alcoholic Beverage Control (ABC) board, State Liquor Authority (SLA), or state-specific commissions such as Michigan's MLCC. These agencies set licensing requirements, determine where alcohol and alcohol-adjacent products may be sold (e.g., liquor stores only vs. grocery stores), and enforce minimum age restrictions. State alcohol control boards sometimes enforce regulations applicable to NA beverages, depending on the state and the product type.

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)

The ATF's role is narrow in the beverage context. It does not regulate labeling or ingredients, but it does handle criminal enforcement matters, such as illegal alcohol production and distribution.

How Do the FDA and FTC Regulate Health Claims?

Both the FDA and FTC regulate the claims brands make about their products. Most non-alcoholic beverages are regulated as conventional foods under the Food, Drug, and Cosmetic Act (FD&C), which places the FDA at the center of the regulatory picture.

How the FDA Regulates Health Claims

The FDA primarily regulates health claims on packaging, labeling and inserts that suggest without "significant scientific agreement" that a food or drink might cure, prevent or mitigate health conditions as a drug would. For instance, the FDA distinguishes between permissible structure/function claims (e.g., "supports relaxation") and impermissible drug claims (e.g., "treats anxiety"). Drug claims trigger a separate regulatory pathway that most beverage brands are not prepared to navigate.

How the FTC Regulates Health Claims

The FTC evaluates health claims made in advertising and marketing materials that aren't substantiated by randomized, controlled human clinical trials. Those rules apply to all products whether they are food, beverages or supplements, and whether they are marketed online through websites, apps, social media and e-mail, through broadcast and digital networks like TV and radio, or in print collateral like direct mail, billboards, transportation wraps, newspapers and magazines, brochures, and promotional fliers.

The FTC requires competent and reliable scientific evidence for any health-related marketing claim. Brands that push the boundaries of permissible claims (particularly in the functional beverage space) risk warning letters, enforcement actions, and civil litigation. That oversight is in addition to the TTB's own regulations regarding the advertising of alcoholic beverages.

Are Dietary Supplements and Conventional Foods and Beverages Regulated Differently?

Yes. And that gets tricky for beverage products that are formulated and marketed in such a way that they straddle the line between the two categories. Both are governed by the FD&C Act, but the rules regarding ingredient safety, labeling, and marketing are applied differently. Classifying a product incorrectly exposes a brand to enforcement action, product recalls, and civil liability.

The core distinction is that any substance intentionally added to a conventional food must either be approved by the FDA as a food additive through a pre-market petition process, or qualify for the GRAS designation. Dietary supplements, by contrast, do not require FDA pre-market approval. Instead, manufacturers bear the responsibility for ensuring their products are safe before they go to market. These frameworks are not interchangeable, and a brand cannot freely choose between them on the basis of convenience.

This distinction has a direct practical consequence for functional beverage brands: an ingredient that clears the supplement pathway does not automatically qualify for use in a conventional food or beverage. Each regulatory category requires its own independent safety analysis.

How Are Conventional Foods and Beverages Regulated?

Beverages are considered “conventional foods” under the FD&C Act. There is no legal mechanism for an ingredient to be “grandfathered in” simply because it’s been sold in the marketplace for years. The legal standard requires both a scientific basis for safety and widespread expert recognition of that safety.

What Is GRAS, and What Does It Mean for Conventional Food Manufacturers?

GRAS status is an alternative to the FDA requirement that ingredients must undergo pre-market review and approval as food additives. To qualify, an ingredient must have a long history of common use or a robust body of scientific evidence demonstrating safety. Substances already common in foods prior to 1958 are exempt from the GRAS approval process. For instance, kombucha's primary ingredients (sugar, tea, and certain microbial cultures) are commonly cited examples.

Novel or functional ingredients are less likely to qualify and require closer scrutiny. If an ingredient does not qualify as GRAS, it must go through the FDA's formal food additive approval process, which is resource-intensive and time-consuming.

Timelines for GRAS Approval

Because there is no statutory requirement to notify the FDA before using a GRAS ingredient, here are two pathways to classify an ingredient as such:

1) Self-affirmed GRAS: a company convenes its own independent panel of qualified experts, compiles safety data, and concludes internally that the ingredient is GRAS for its intended use: without any FDA involvement. The determination stays in company files, and the FDA may not even know the ingredient is being used.

Self-affirmed GRAS has no mandatory timeline. A company can move as quickly as its scientific review allows, which in practice means months of work to assemble the necessary safety data and convene an expert panel, but with no waiting period imposed by the FDA.

2. FDA-notified GRAS: the company submits a formal notification (sometimes called a GRAS Notice) to the FDA's Office of Food Chemical Safety, Dietary Supplements, and Innovation. The FDA evaluates the submission and issues one of three responses: a "no questions" letter (effectively confirming the determination), a letter finding the notice insufficient, or a letter stating that the agency has ceased evaluation. GRAS Notices, once resolved, are catalogued in the FDA's publicly available GRAS Notice Inventory.

The FDA has reviewed over 1,000 GRAS Notices since the program began in 1998 and processes roughly 75 per year. The formal target is a 180-day review window from filing, but in practice the process frequently extends to a year or longer, particularly for novel or complex ingredients where the FDA requests additional data.

Self-affirmed GRAS is typically the faster, cheaper, and more confidential pathway, as the safety dossier never becomes public. FDA-notified GRAS takes longer and puts the determination in the public record, but it provides meaningfully stronger regulatory standing: investors, retail partners, and distributors often treat an FDA “no questions" letter as a more durable form of validation.

Many brands start with self-affirmed GRAS to get to market and later pursue FDA notification for credibility purposes. Importantly, the scientific rigor required is the same under both pathways; the difference is who reviews the data and whether the determination is disclosed.

2025 Changes to GRAS Under HHS Secretary Kennedy

That said, the GRAS landscape is changing. In March 2025, HHS Secretary Robert F. Kennedy Jr. directed the FDA to explore rulemaking that would eliminate the self-affirmed GRAS pathway and require all GRAS determinations to be submitted to the FDA for review.

As of this writing, no rule has been proposed, and the process of rescinding or amending the existing GRAS regulations would itself take at least a year of notice-and-comment rulemaking, and potentially longer. Brands relying on self-affirmed GRAS determinations (particularly for novel functional ingredients) should monitor this issue closely. Founders should view self-affirmation as a temporary speed-to-market bridge rather than a permanent regulatory strategy.

How Are Dietary Supplements Regulated?

Dietary supplements are regulated under the Dietary Supplement Health and Education Act (DSHEA), a 1994 amendment to the FD&C Act. The one exception to the no-pre-approval rule involves New Dietary Ingredients (NDIs)—ingredients not on the dietary supplement market before October 15, 1994. Manufacturers wishing to include an NDI must file a notification with the FDA at least 75 days before the product enters interstate commerce. This is a mandatory waiting period, not merely a filing deadline. NDI notifications and the FDA's response letters are publicly available, which is an important distinction from self-affirmed GRAS.

The NDI pathway applies only to dietary supplements, not conventional food and beverage products—an ingredient cannot simultaneously be marketed as a food additive in a beverage and as a dietary supplement ingredient under DSHEA. This distinction trips up many functional beverage brands that attempt to rely on supplement-industry safety data to justify including novel botanicals in a drink.

Rather than a standard nutrition facts panel, dietary supplements must display a supplement facts panel. They may also carry structure/function claims, provided they include the standard DSHEA disclaimer: "This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease."

Beverages vs. Supplements: How Operators Navigate the Regulatory Divide

Some manufacturers have attempted to market beverage products as dietary supplements because the regulatory pathway is generally considered less burdensome for novel ingredients than the food additive / GRAS pathway established by the FDA.

Indeed, this practice is common enough that the FDA has addressed it directly in its guidance document Distinguishing Liquid Dietary Supplements from Beverages, making clear that labeling a liquid product with a Supplement Facts panel does not, by itself, make it a dietary supplement. To distinguish which products, fall under the conventional foods category and which can be considered liquid dietary supplements, the agency evaluates the totality of how a product is represented to consumers.

As the saying goes, “if it looks like a duck and quacks like a duck....” In this context, if a product is functioning as a beverage, it will be regulated as one.

The factors the FDA considers include:

• Do the branding and packaging use terms like "drink," "water," "soda," or "beverage"?
• Do the serving size and intended daily consumption suggest regular beverage use or occasional supplement dosing?
• Does marketing language use terms like "refresh" or "rehydrate," or compare the product to juices and sodas?
• Is the product placed in the beverage aisle or with dietary supplements at retail?
• Is the composition mainly conventional food ingredients, with only a single functional ingredient?

One of the most widely cited FDA enforcement examples is Rockstar energy drinks, where the FDA concluded that Rockstar's coffee-based products were conventional beverages—not supplements—because of their product names, marketing language and format, despite containing ginkgo biloba. The ginkgo biloba was treated as an unapproved food additive that rendered the beverages adulterated under the FD&C Act.

What Happens If Non-Alcoholic Beverage Brands Use Unapproved Food Additives?

Using an unapproved food additive in a beverage renders the product legally adulterated under the FD&C Act, regardless of label messaging. The FDA does not pre-approve food labels before products go to market, but it retains enforcement authority to act against misbranded or adulterated products already in commerce. Conventional food labels must include a statement of identity, the nutrition facts panel, allergen disclosures, net quantity of contents, and the name and address of the manufacturer.

Before finalizing a product formula, brand name, tagline, or go-to-market strategy, non-alcoholic beverage brands must determine—with legal counsel—whether their product will be regulated as a conventional food or a dietary supplement. That determination drives every subsequent decision about ingredient selection, label design, marketing copy, and where and how the product is advertised, distributed, and positioned on store shelves.

How Are Alcoholic Beverages Regulated?

Federal regulation of alcohol in the United States involves three primary agencies: the TTB, the ATF, and the FDA. The TTB is the central regulator for labeling, advertising, and excise taxes on distilled spirits, wines, and malt beverages. The ATF handles criminal enforcement. The FDA provides a regulatory floor that applies even within the alcohol space. Critically, alcohol is also regulated at the state level through a three-tier system (producer, distributor, retailer) that varies considerably by state. These state-level requirements exist alongside, and sometimes in tension with, federal rules.

Once a beverage crosses the 0.5% ABV threshold or falls within a category specifically subject to TTB jurisdiction (such as malt beverages containing malted barley and hops), the regulatory picture becomes more complex. Products at or above 0.5% ABV are generally subject to TTB jurisdiction (and, where applicable, state alcohol control laws). Products below that threshold are generally regulated by the FDA as conventional foods. This distinction has important practical consequences for labeling, distribution, and where products may be sold.

How Are Non-Alcoholic Beverages Regulated?

Non-alcoholic beverages occupy an unusual regulatory position: they are often sold alongside and marketed in direct competition with alcoholic products, but most are regulated as ordinary food. The determining factors at the federal level are:

• How much alcohol the product actually contains
• Whether fermentation could increase alcohol content after bottling
• What labels and advertising imply about health effects

There is no federal minimum purchase age for beverages below 0.5% ABV; whether minors may purchase these products is determined by state law and varies considerably.

How Are Zero-Proof Spirits and Spirit Alternatives Regulated?

The zero-proof spirits category has grown into a sophisticated market, with brands like Seedlip and Lyrés offering products styled as whiskeys, gins, tequilas, and other familiar categories. Most of these products contain well under 0.5% ABV and are therefore treated as conventional foods under FDA labeling rules, not as distilled spirits under TTB jurisdiction.

Because many zero-proof spirits contain trace amounts of alcohol from natural sources or production processes, they cannot legally use an "alcohol-free" claim. Under 27 C.F.R. §§ 4.73, 5.73, and 7.73, "alcohol-free" is reserved for products containing 0.0% ABV, and any detectable alcohol disqualifies the term. Brands typically use descriptors like "non-alcoholic" or "spirit alternative" instead. Labeling also requires care around product naming: using standard category terms like "gin" or "whiskey" without qualification risks misleading consumers into believing a product is a distilled spirit.

How Is Non-Alcoholic Beer Regulated?

Non-alcoholic beer is subject to more prescriptive federal rules than many other NA categories. Under the Federal Alcohol Administration Act (FAA Act), the TTB retains primary jurisdiction over any "malt beverage," defined as a product made with both malted barley and hops, regardless of whether the final alcohol content is 0.5% or 0.0%. Consequently, even "0.0%" brews that use traditional ingredients must comply with TTB labeling and advertising standards rather than the FDA's conventional food rules. Under federal law, the term "non-alcoholic" must be immediately accompanied by the phrase "contains less than 0.5% alcohol by volume" in direct conjunction with the product name.

How Is Dealcoholized Wine Regulated?

Dealcoholized wine begins as conventionally produced wine, fermented and aged, before the alcohol is removed. Under the FAA Act, wine is defined as a product containing between 7% and 24% ABV, so TTB labeling restrictions apply only within that range. Dealcoholized wine, which typically falls below 0.5% ABV, is regulated by the FDA under the FD&C Act. Federal labeling requirements mandate that the product's statement of identity include "dealcoholized" or "alcohol-removed," preceded by "wine" or a specific wine designation. Labels must also include the declaration "contains less than 0.5 percent alcohol by volume."

How Are Fermented Beverages Like Kombucha Regulated?

Kombucha is a lightly carbonated tea produced through fermentation. Because it must contain less than 0.5% ABV to be sold outside of alcohol channels, kombucha is regulated by the FDA as a conventional food. The principal ingredients in traditional kombucha—black tea, sugar, and the microbial cultures used in fermentation—are considered GRAS based on long-standing common use. Novel added functional ingredients (adaptogens, cannabinoids, exotic botanicals) are a different matter: each requires its own GRAS or food additive analysis.

Fermentation creates a unique compliance risk. Even if kombucha tests below 0.5% ABV at bottling, continued fermentation in the bottle can push alcohol content above that threshold, reclassifying the product as an alcoholic beverage. This issue has fueled a wave of high-profile litigation over the past decade, prompting producers to implement rigorous pre- and post-bottling alcohol monitoring protocols. Health claims about digestive benefits from probiotic content that cannot be substantiated by competent scientific evidence draw scrutiny from both the FDA and the FTC.

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How Are Hemp Beverages Regulated?

Hemp-derived THC beverages have grown rapidly into one of the most dynamic categories in the beverage market. Their rise is largely attributable to the 2018 Farm Bill, which effectively legalized hemp-derived products, including those with intoxicating effects, at the federal level, subject to state programs. Unlike state-licensed cannabis products that can only be sold through licensed dispensaries, THC beverages can move through mainstream distribution channels in states with permissive hemp regulations. Industry groups like the Colorado Hemp Beverage Coalition have played an active role in shaping state-level policy and advocating for clear regulatory frameworks that allow hemp beverages to compete in mainstream retail channels.

As this market has matured, states have increasingly adopted serving- and container-level milligram caps on intoxicating cannabinoids rather than relying solely on the 0.3% delta-9 THC dry weight standard (which notably applies to the hemp plant feedstock, not the finished beverage product). Some states have gone further by creating a dual-market model that deliberately separates hemp and cannabis beverages by retail channel. Minnesota, for example, permits hemp-derived THC beverages to be sold in restaurants, bars, and grocery stores, while licensed cannabis products remain confined to state-licensed dispensaries. This provides consumers access to intoxicating beverages in familiar settings without requiring a dispensary visit, to the tune of a projected $1.5 billion in sales and anticipated 700,000 customers served by 2029. Even states celebrated for traditional alcohol production and craftsmanship like Kentucky now permit hemp-derived THC beverages, subject to a 5mg cap on intoxicating cannabinoids per container.

For a deeper look at the hemp beverage market and the respective roles of federal and state agencies, see our comprehensive Hemp Beverage FAQ.

Will Hemp Beverages Be Banned at the Federal Level?

This market faces significant federal uncertainty. The FY2026 Consolidated Appropriations Act includes a provision restricting consumable hemp products to 0.4mg of THC per serving, which would effectively, if not categorically, ban most hemp beverages currently on the market. Regulatory guidance implementing this provision has not yet been finalized, and some interpretations limit its scope to hemp-derived cannabinoids beyond CBD. The November 2026 implementation date has driven considerable legislative activity at the state level, but the full shape of federal enforcement remains unclear.

Whatever the federal outcome, the hemp beverage market is unlikely to disappear entirely. Several states are already passing legislation with trigger provisions that would update their definitions of hemp upon federal implementation. Notable examples include Utah and Missouri.

Hemp beverage brands should not assume their current state model will survive intact. Prudent steps include: (1) modeling product reformulations to comply with a 0.4mg/serving cap; (2) tracking state legislative developments; and (3) evaluating whether a transition to licensed cannabis distribution channels might become necessary or advantageous.

For a more detailed analysis, see our 2025 Federal Hemp Reclassification overview.

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How Are Functional Beverages Regulated?

The term “functional beverage” has no formal legal definition, but it describes a category of products marketed for a specific health outcome: relaxation, focus, improved sleep, mood support, energy, and similar benefits. The regulatory risks in this category arise primarily from how products are marketed, not just what they contain.

The FDA draws a critical distinction between permissible structure/function claims (“may help support a calm mood”) and impermissible drug claims (“treats anxiety” or “reduces symptoms of depression”). Drug claims trigger a pharmaceutical regulatory pathway that no beverage brand can realistically navigate.

For brands formulating with novel ingredients, adaptogens, nootropics, lesser-known botanicals, the regulatory analysis must follow the food additive/GRAS framework. Supplement-category safety data does not transfer to conventional food products.

How Are Kratom Beverages Regulated?

Kratom beverages are marketed for energy, mood support, and relaxation, and may carry stimulant or opioid-like effects depending on dose. The FDA's position is unusually direct: kratom is not lawfully marketed in the U.S. as a drug, dietary supplement, or food additive in conventional food.

Many kratom beverages on the market contain 7-hydroxymitragynine (7-OH), a kratom alkaloid that faces a distinct and more severe regulatory treatment. The FDA has specifically targeted 7-OH products in recent enforcement actions, and brands should not assume that compliance with kratom rules generally provides shelter for products containing 7-OH.

State law is highly fragmented: some states have enacted total prohibitions on kratom, while others have adopted a version of the Kratom Consumer Protection Act (KCPA). Any brand operating in the kratom beverage space must conduct a state-by-state legal audit before going to market.

How Are Kava and Kanna Beverages Regulated?

Kava and kanna are centuries-old botanicals that have found new audiences through the functional beverage market. Their regulatory profiles differ meaningfully, and brands should treat them separately.

For a detailed treatment of the history and regulatory landscape of both kava and kanna, see our article specifically on these substances.

Kava Beverages

Kava has gained a visible presence through kava bars across the United States. Under a 2020 FDA memorandum, the FDA concluded that kava is an unapproved food additive when used as an ingredient in conventional foods, citing scientific evidence of liver toxicity. In 2025, however, the FDA clarified that kava prepared as a tea would be considered a conventional food (and, therefore, can be consumed in compliance with the FD&C Act).

However, as soon as a brand adds carbonation, sweeteners, or other functional botanicals, the kava is re-classified as an unapproved food additive, rendering the beverage legally “adulterated” under the FD&C Act. Similar to kratom, but to a much lesser extent, states and localities have begun regulation. Two states have recognized kava as safe and permissible, but only in the GRAS-compliant traditional tea form: Michigan and Hawaiʻi. In contrast, New York City's 2023 ban on kava bars (upheld as consistent with federal law) has not been formally revisited in light of the 2025 FDA position.

Kanna Beverages

Kanna is used in dietary supplements, teas, tinctures, and beverages to promote relaxation, focus, and emotional balance. It is generally considered lower-risk than kava. No state specifically prohibits kanna, with the narrow exception of Louisiana's catch-all prohibition on hallucinogenic plants, which includes Mesembryanthemum species (the genus to which kanna belongs).

What are the Compliance Risks for Kava & Kanna Beverages?

For brands operating in the kava and kanna space, the most significant compliance risks are: insufficient safety substantiation for the specific ingredient and dose used in a beverage format; claims that drift into drug territory (treatment of anxiety, insomnia, or pain); and state-level scrutiny of retail operations, particularly kava bars, where local health departments may apply federal adulteration standards independently of state law.

How Are Adaptogenic and Nootropic Beverages Regulated?

Beverages infused with adaptogens and nootropics (aka, functional mushrooms like lion's mane, cordyceps, reishi, etc.) are generally legal at both the federal and state levels. Brands like BRĒZ and Kin Euphorics have built substantial consumer followings in this space. With these beverages, the regulatory risk is concentrated in marketing, not formulation.

Because these beverages are sold as conventional foods, each functional ingredient must satisfy the food additive/GRAS framework described above. Benefit claims must satisfy both the FDA structure/function claim requirements and the FTC's substantiation standard. Many claims common in this category—improved cognition, stress reduction, mood enhancement—are difficult to substantiate to the applicable standard and should be reviewed carefully before use in any marketing materials.

How Are Wine Proxies and Verjus Regulated?

Wine proxies are non-alcoholic beverages engineered to replicate the sensory experience of wine, built from scratch using fruits, botanicals, and other ingredients: often with verjus (the tart, unfermented juice of unripe grapes) as a key component to replicate wine's acidity. Because they typically contain around 0.4% ABV, they fall below the thresholds that trigger TTB or state alcohol jurisdiction and are regulated as conventional food under the FD&C Act. No federal or state framework specifically contemplates this category.

Brands should still ensure that product identity statements and marketing materials could not reasonably lead consumers to believe the product is an alcoholic wine: both to avoid regulatory scrutiny and to maintain consumer trust.

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What's Ahead for the Non-Alcoholic Beverage Market?

The long-term decline in alcohol consumption is structural, not cyclical. Consumers are reweighing the tradeoffs between the social and hedonic value of alcohol against health, sleep, fitness, and cognitive clarity: and many are choosing differently than prior generations. No single product is filling the gap, but rather a broadening portfolio of alternatives: sophisticated zero-proof spirits, dealcoholized wines, upscale wine proxies, NA beer, and a growing array of functional beverages.

The next phase of this market will be shaped by two forces in tension: product innovation and regulatory tightening. Categories with clearer regulatory footing (NA beer, dealcoholized wine, and many spirit alternatives) are settling into predictable compliance frameworks. Categories with ambiguous or contested legal status (hemp-derived THC beverages, kratom, and novel botanical compounds) face sharper scrutiny, state-by-state fragmentation, and mounting enforcement risk.

The brands that will define this space are those that understand the regulatory landscape well enough to build products at the intersection of genuine consumer demand and legal durability.